UNITED STATES SECURITIES AND EXCHANGE COMMISSION
RELEASE NO. 15749 / May 19, 1998
Securities and Exchange Commission v. Richard Carlos Powelson, individually
and dba PBS Trust, Roger Frederick Kline, and Bryan Paul Shortsleeve, (M.D.
Fla., Civil No. 98-949-CIV-T-23F)
The Commission today announced the filing of a Complaint charging
three individuals with securities fraud in the sales of a get rich quick
infomercial scheme. The Complaint filed on May 5, 1998 in the United
States District Court for the Middle District of Florida names the
infomercial creator, Richard Carlos Powelson, who lives in Kansas City,
Missouri, and two salesmen, Roger Frederick Kline, and Bryan Paul
Shortsleeve, who live in St. Petersburg, Florida with violating the federal
securities laws by making false statements while selling to elderly clients
investments in an infomercial created by Powelson to sell his real estate
training program that is titled "How to Build a Fortune." The scheme
raised $1,096,000 from fifteen investors, the majority of whom live in the
St. Petersburg, Florida area and the remainder live in Potage and Walled
Lake, Michigan and Winona, Minnesota.
The Complaint alleges that Powelson, Kline and Shortsleeve gave
investors sales materials that falsely represented investors would receive
150 percent return on their investment within six to nine months based on
sales of 300,000 of Powelson's real estate training programs; however,
Powelson had no reasonable basis for these projected sales and earnings,
because he had never previously produced an infomercial. He had only
appeared as a speaker in earlier infomercials.
The Complaint also alleges that the sales materials failed to disclose
that Powelson filed personal bankruptcy in 1990 and had been barred from
participating in real estate transactions with the Department of Housing
and Urban Development.
Additionally, the Complaint alleges that the sales materials
represented that only five percent of the money raised would be spent on
marketing, when in fact, Kline and Shortsleeve received commissions of
twenty percent which were not disclosed to investors. Kline and
Shortsleeve failed to verify the truthfulness of any of the statements in
the sales materials.
The Complaint further alleges that Shortsleeve falsely represented
that elderly investors were losing money on insurance annuity policies as a
means to persuade them to invest in Powelson's infomercial
The Complaint asserts the defendants' actions violated the anti-fraud
provisions of Section 17(a) of the Securities Act and Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5, seeks an injunction to stop
them from future violations of the
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federal securities laws, and requests an order requiring them to
repay any money they obtained illegally and additional civil penalties. No
trial date has been set.
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